No Brainer Trades

I know BRV has used trend lines with success that have only touched twice. In my opinion, I don't think there is any fixed rule regarding 'number of touches' other than 'they must be obvious to many' ... as should be the case with horizontal S/R levels

There are no fixed rules....

Three touches are certainly better than two, but if you want to get in early...

Trend lines are classed by many on here as ambiguous, however they can also be very significant, some TL's once breached are redundant others come back into play several times.

I use TL's in 4H charts and upwards with good results.

Hey guys, since BRV mentioned that he is incorporating breakouts into this method I have been trying all sorts of things. Nothing really has tested out so well besides this method. Its based on an ORB methodology. I have two openings that I use 0100-0300 NY time for the London opening range. And 0700-0900 NY time for the NY opening range. If you have more interest check out the big dog breakout thread. I have found some good ideas in there. Heres something I posted in that thread. Any how my methods are different from what they use. But very similar to what we use over here. So I thought I would post over here how I employ this method. Here are my notes.


The basic premise of ACD is to plot particular price points,in relation to the opening range.


The key is to define the time period for the opening range and then be consistent when you trade using that time period.


There is one other important consideration about the opening range, and that is making sure its based on its domicile market. E.G. If you were trading, say Japanese Yen, then the opening of the U.S. Currency markets wouldn't apply. Rather, you'd have to look to the opening of the Japanese markets.


Once you have identified the opening range, this price range is an important reference point for your trading strategy.


It has more weight than any other time interval.


The opening range is the statistically significant part of the trading day, marking the high or low for the day (in volatile markets) about 20 percent of the time.


Thu, I constructed a trading model based on breakouts of the opening range on the premise that once this occurs, the market is likely to continue in that direction. These breakouts are determined using a time and price filter that is applied to the opening range.


Based on this opening range, the A point to enter a long or short position is plotted above or below the opening range, based on set variables.


A points- up or down- are based upon certain number of ticks above or below the opening range, if trading is sustained at these levels for a period of time equivalent to half the duration of the opening range that you have chosen.


There is only one A per day. That means, once a A up is established, there can be no A down for that trading day. Or, if an A down is established, there can be no A up for that trading day.


Once you have established an A- up or down- your stop for getting out of an unprofitable trade is B. The B level, where you would be bias neutral, is delineated by the opening range.


I you established a long position and then the market broke immediately and traded lower, your stop to exit the trade would be at the lowest end of the opening range.


Lets assume that the market did reach the A target on the upside, which I call making an A up.


Once an A has been made, the next probable entry point in the ACD system is point C. Point C's are calculated based upon a certain number of ticks above or below the opening range.


Point C is the crossover point at which your bias shifts from bullish to bearish, or vice versa.


If you have a C down, the stop-known as Point D- would be 1 tick above the top of the opening range.


In trading time is actually more important than price.


As a minimum the market must trade at a a certain level for a time period.


As a maximum, if the market has not acted the way you expected within a time frame equivalent to the opening range, then get out.


If you have an A up plotted, and the market goes up to that price, touches it and immediately sells off, was your target reached? No. The market must spend time at a price target in order to be valid. If your day trading then the market must spend at least 2 ½ minutes at your price targets to trigger them.


So, in the example above, if the market didn't spend 2 ½ minutes but rather just touched it and immediately went down- then you didn't have an A up.


Lets take a look at the concept of a failed point A.


In this scenario, the market trades lower after the opening and approaches the A down target at 2052. The market must spend 2 ½ minutes at 2052 or lower. Instead, the market trades down to 2053, then like a rubber band stretched to its limit, seems to snap back to a higher level. At this point, with a failed A down, your risk of establishing a long position after the snap back is small as long as you know where you'd get out if you're wrong- the A down target.


Establishing a short position on a failed A up or a long position on a failed A down provides the potential to make a profit that far outweighs the risk.


Remember, this concept of the rubber band trading only works if you have a failed A up or a failed A down. Once an A up has been established, you must retain a bullish bias above the opening range and a bearish below.


A rubber band trade is made when the market approaches or just touches a target and snaps back. In that instance, you would go short just below the A up or go long just above the A down. Your stop would be the A up/down point.


The system is comprised of reference points. In other words, you have prices to lean against as you make your trades, enabling you to maximize your size and minimize your risk.


Points of reference in ACD give you something to lean against as you make your trades. At all time, you know where you're getting out if your wrong. The result is confidence to trade.


Using the rationale that you always know where to get out if you're wrong, you can use the ACD system to do other types of trades such as buying dips and selling rallies, with ACD points as references.


According to the ACD system, once an A is established, your bias has to reflect the markets relation to the opening range- long above it and short below it.


So lets say the market makes an A up at 2085 and you hold that long and exit at 2150. Now, the market trades lower and goes below the point A- but its still above the bottom of the opening range. You believe that the market still has some upside potential. Thus you decide to buy this dip.


Once again, the question at all times is where will you get out if you're wrong? In this scenario just described of getting long below the A up, your stop point- where your bias turns from bullish to neutral- would be the bottom of the opening range.


These buy the dip, sell the rally variations on the ACD strategy do not violate any of the basic rules. Once the A up or the A down is established, you retain a bullish bias above the opening range and a bearish one below.


Using the reference points of the system, you'll be able to draft your strategy- always knowing where you'll get out if your wrong.


Five rules

1. Plot Point As and Cs as points of reference.
2. Lean against the reference points as you execute your trades
3. Maximize your size when the trading scenario is favourable. At all times minimize your risk.
4. Know where you are getting out if your wrong
5. If you can answer 4, you will trade with confidence

Lets examine another strategy based on the A and C reference points, in this case fading point Cs.


A classic failed C down. The market touched the Point C level, but did not trade there for a period of time. After the market bounces from the failed C down, you could decide to fade taking a long position just above it. Your stop would be Point C at which you'd have to abandon your upward bias. We call this trade a Good A Up, Failed C Down. (opposite Good A Down, Failed C Up)


The importance of time cannot be stressed enough, particularly in these opening ranges.


In the preceding example while the market did touch the Point C level, it did not trade for a sufficient length of time there. The failure to trade at or below Point C for half the span of the opening range is what made it a failed Point C down.


What is the main rule never to forget? To know where and how you are getting out if you are obviously wrong.

Anyone here know a good book or have had success Scalping?

Is it only done with trend lines? No Fib projections?

I am fairly new to Forex but old to trading, I keep hearing about Scalping, I wouldn't mind a few pointers from someone who can do it consistently.

I only trade EUR/USD currently, if I want to scalp is there enough action in that one pair to keep me busy or should I start watching more currencies?

Thanx,

Damon

Here is the another form of breakout that I have found to have success.

A breakout from a narrow range bar or an inside bar on these time frames.

H24, H20, H16

Guerillawar,

You are quite clear in your explanations. Good as a mentor.

Could you please post some charts and basic indicators?

Thanks

Hey GW,

I remember talking to you a few pages back about inside bars. How do you decide entry points and sl's on the daily time frame for inside bars?

Hi folks

I am planning to get stuck into my charts this afternoon after a couple of days off so I will put anything up that I find interesting.

If there's any levels of note that have appeared on the radar let me know.

The conventional way to trade these is.

1. Determine the stretch ( percentage of ATR)
A. Stretch is necessary to eliminate false positives

2. Stop is placed on the other side of the inside or narrow range bar.
A. If short your stop is above the the N.R. or I.B.

3. Target is 3 times or 5 times the N.R. or I.B. bar.
A. Alternative target major support resistance H2 or greater

Hi guys, a potential Wolfe Wave which if plays out will likely provide a short on the Euro at the Daily Close level at the trendline bounce at the daily 23.6 fib level and S&R (acted as both resistance and support yesterday, also in the last week in November).

Just something to keep an eye out for. 1.2913

Good stuff GW. I've had a week off trading reading and testing a plenty too funnily enough. I noticed that the midnight (00:00 GMT) open (not just range) is often used as S/R - something which I've never noticed before.

Hey triphop

If you take our previous daily candle and place the Open High Low and Close on yor chart you will see that the next day uses each and every one of those levels. That is actually how I trade daily. I take the Daily levels of the previous day and also even levels of each 8 hour period and trade it on a 15 minute.
These are not necessarily major trades where you plan on collecting a 100+ pip move unless they converge with a bigger level. But these levels provided by candle OHLCs on larger Timeframes has provided me 20 - 30 pips easy to collect on smaller time frames on initial reaction.

when you have the time could you please show a few charts of what your talking about. I would love learn a new trick.

GW, the reason it is often used as S&R is because it IS S&R. I was attempting to build a trading system off that very fact of the daily open. The market tends to pick a direction for the day after the open of the daily.
Truth is that each candle itself provides S&R levels. The daily being a large Time Frame will show a more clear effect of S&R taking place than on smaller TimeFrames.

Here's a trade I just took using the ACD ORB method combined with what we use here.

1. Price is at resistance per BRV methods.
2. I used the opening range of 0830-0900 NY time
3. Break of opening range creates an A down
3. I entered on the retest or ORB boundary.

This shows how the ACD method can be used by BRV type traders

Hey TS,

I'm a little confused about taking profit at which trendline like you showed in your chart. The trend line made by points 2 and 4 from the wolfe wave?

Hey libb.. the take profit is for me as I was long at point 5.. but the short is at the level noted 1.2913 at the TL looking for the market to hit the daily close and S&R

Oh ok, I was thinking you were looking at a bounce after the wolfe wave. Cool little pattern though, I'll look out for it from now.

libb.. I was indeed looking for a bounce after the wave. That was what I was saying to watch for. A short on Euro at 1.2913. Just happened that I was in a long on Euro and my chart had that Take Profit note for myself. But I also took a short at the 1.2913. (1.2915 entry for me)

I took a 20 pip profit and locked my other entry stop in at +1 pip. I am hoping for the market to probably make a better run up creating a nice divergence. It might be late to jump on now, but watch it. An entry might just make itself available soon (I hope so).